It is no surprise that Social Security is the largest retirement income asset of the average American senior. As baby boomers enter retirement age, it is expected to supply more than 50% of income for about two-thirds of Americans in retirement. With such dependency on this single source of income, many Americans may be ill-equipped to handle future changes to these benefits.

While one remaining typical source of wealth includes the usual personal retirement savings, another possible income source is largely ignored, according to a recent article from Forbes.com.

The author points out that lack of focus on home equity as a retirement income planning tool is an oversight that needs to change in order to save many people from financial challenges in retirement. The article continues to describe that utilizing a reverse mortgage loan is one such strategy that deserves special consideration.

Reverse mortgages, specifically the government-insured Home Equity Conversion Mortgage (HECM), are home equity loans that help “retirement-age homeowners ‘age in place’ in a familiar setting where convenience and long-term relationships contribute to a preferable quality of life,” says ReverseVision President and CEO John Button.

The article outlines four techniques where reverse mortgages can be strategically used to improve a retirement income plan:

Defer Social Security benefits to guarantee a 7-8% increase every year.

Give investments time to recover after they drop in value.

Allow for Roth conversions at a low tax rate by using tax-free reverse mortgage proceeds.

Reduce retirement expenses and increase cash flow.

However, though experts such as Nobel Prize–winning economist and MIT professor Robert C. Merton endorse this loan, many consumers still hold reservations about them. Gaining a better understanding of how a reverse mortgage works can clear up any misconceptions the public may have, and provide a way to save America’s senior population from a potential housing crisis.

Learn more about what a reverse mortgage is and how it can help you by contacting a licensed Nationwide Mortgage reverse mortgage professional at 800-282-8820 or you can contact us and we will quickly get back to you.

During the past couple of years as mortgage guidelines have tightened, home buyers have had to come up with larger down payments when purchasing a home. Whether the application is for a conventional home loan or an FHA loan, banks want the home buyer to contribute more money to the purchase. Sad to say, not all buyers have the money.

This is one reason that more and more home buyers are requesting “down payment gifts” from family members. Many potential home buyers don’t want to miss their opportunity now that home prices have dropped, mortgage rates are low and a generous first-time home buyer tax credit is available.

But if a monetary gift will be in the mix for financing the purchase of your home, you should understand that there is a right way and a wrong way to proceed. So before you run out to your parents and say show me the money, it is just not possible to simply put the funds from your parents in your bank.

A three step process is involved when you accept cash for a down payment. If you fail to follow these steps precisely, it is quite likely that an underwriter will disallow the gift as a source of down payment potentially delaying closing or killing the deal altogether.

The first thing to do is to create and endorse an acceptable gift letter. While there are a number of variations of the “Down Payment Gift Letter,” the basic format is pretty much the same in each.

States the amount of the gift

Specifies the subject property address

States the gifters name, address and phone

Specifies the relationship of the gifter to the giftee

Specifies that the gift is an actual gift and not a loan

Endorsed and dated by all parties

If you do not have a lender gift letter I would be glad to send you one that I use for my clients. Its universal and accepted by all lenders. Just send me an email.

Once the gift letter is in place, the person making the gift should create a strong paper trail for the money that is being provided as a gift. This is one reason why it is preferable to use certified checks rather than wire transfers. While both methods are acceptable forms of gifting, a certified check provides documentation in the form of a teller receipt, making it easier to prove.

Be sure that the amount specified in the gift letter matches the amount of the actual gift.

Finally, when a giftee accepts the gift, it has to be “as is.” Make the deposit directly to a bank teller at a branch of the bank, being careful not to merge the deposit with other monies. For a gift in the amount of ten grand, for instance, you should deposit exactly that amount. That is to say, don’t add any other money to the deposit. If you follow these three steps, you should not have any problem.

In the meantime, you could face legal and tax ramifications if gifts of money are exchanged among relatives. In case you don’t know how a donation or gift receipt would affect you, remember to discuss this with your lawyer or accountant.

For the fourth straight month, the Housing Market Index (HMI) — a measure of homebuilder confidence nationwide — has dropped. Builders are citing rising costs for materials and fewer lots and laborers as reasons for the downgrade.

Yet, despite their lesser confidence levels, builder sales expectations for the upcoming 6 months is as high as its been since 2007.

Put it all together, and we see builders with bigger sales and smaller margins. The news could prove costly for today’s new construction buyers. Builders may be even less willing to negotiate with a buyer as the year progresses forward.

Jobless Claims Rise

This morning, weekly Jobless Claims rose a little to 352K, which was very close to the consensus. Philly Fed declined to 1.3, which was a little lower than expected.

Copper prices are at the lowest level in 1.5 years.

This chart shows the change in mortgage-backed securities (MBS) prices from today’s market open at 8:00 AM ET and tracks how MBS prices have changed until the time of this post. The vertical-axis reflects the change in MBS pricing as measured in 32nds. Each 32nd is equal to 3.125 basis points.

Home buyers are a growing part of the U.S. mortgage market, with purchase mortgage transactions accounting for 38% of the nation’s closed mortgages last month, the largest percentage since August 2012.

Refinance activity has grown this year, but purchase activity has grown faster.

Home Buyers Crowding The U.S. Market

According to mortgage origination software firm Ellie Mae, which handles more than 3 million mortgage applications per year, purchase home loans increased market share 6 percentage points last month as compared to refinance activity, marking the largest one-month increase since March of last year.

Not surprisingly, market conditions from last month resemble those from March 2012 :

Home prices were rising nationally, creating urgency among U.S. home buyers

U.S. mortgage rate were rising sharply, increasing the cost of homeownership

The FHA had a planned MIP increase, set to launch at month’s end

Buyers got busy in March, the data shows; even application volume soared. According to the Mortgage Bankers Association (MBA), purchase applications climbed last week to a near 3-year high.

Plus, for today’s home sellers, the good news is that a growing percentage of those loan applications is turning into closed loans. As compared to one year ago, the closing rate of purchase loan applications is higher by six points to 60 percent.

Ellie Mae : Mortgage Approval Statistics

The March 2013 Ellie Mae Origination Insight Report also provided data about recent mortgage applications, and what is required for an approval.

For example, the report showed that when home buyers attempted to buy a home using FHA-insured financing, their average offered downpayment was 5 percent. However, the likelihood of gaining bank approval wasn’t linked to downpayment, per se, but to debt-to-income (DTI) ratios.

Buyers whose DTI exceeded 45 percent were typically denied mortgage financing, while the average DTI of an approved FHA mortgage was 40 percent.

Other statistics from the report :

Average FICO for a closed conventional mortgage was 743 — an 18-month low

Also noteworthy was that the average LTV for an approved conventional mortgage jumped to 74 percent, up from 65 percent one year earlier. This is a function of the hugely popular HARP 2.0 mortgage program for underwater homeowners.

13 percent of last month’s closed conventional loans featured LTVs of 95% or higher.

Get Today’s Mortgage Rates

With the growing share of purchase mortgage applications, the Ellie Mae report suggests that home buyers can expect more competition for homes, and, likely, more bidding wars on listings. As a buyer, consider getting pre-approved.

Pre-approvals are not required before buying a home, but they can help you plan for an upcoming purchase. You’ll have the confidence of knowing what home you can afford, and sellers will know you’re serious in your bid.

Getting pre-approved is easy, is no-cost, and starts with seeing your mortgage rates.

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Nationwide Mortgage Bankers

Looking for a low rate home loan? You will find low rate loans at Nationwide Mortgage Bankers! We designed this mortgage site to give you all the information you need to assist you in obtaining financing for your home.

Nationwide Mortgage Bankers is one of the largest mortgage lenders in Virginia, Offering low rates for home purchase, refinancing, debt consolidation, reverse mortgages and many other types of loans.